WASHINGTON –The aerospace industry, which has been historically immune to spending cuts, could face a difficult path ahead as a result of sequestration, according to an industry report released this week.
As a consequence of the Joint Select Committee on Deficit Reduction’s failure last year to come up with a deficit reduction plan, the aerospace industry will be the victim of a $1 trillion cut, which is estimated to put 2.14 million defense and nondefense jobs at risk, according to a study conducted by the Aerospace Industries Association.
About half of the cuts would come from nondefense spending, including the FAA, which would have both short and long term impacts on the agency.
“A sword is coming down on us,” said Norman Mineta, the former Secretary of Transportation who is now vice chair of public policy at Hill & Knowlton Strategies, a public relations firm.
Planned cuts would decrease the FAA’s total annual budget by 10 to 15 percent, the study warned.
Although the sequestration cuts are not scheduled to happen until January, air travelers would start to feel the effects in October because the agency would have to adjust daily operations based on the expected incoming budget and the 60-day advance notice required for layoffs.
The agency would be forced to reduce some of its TSA screeners and custom agents, the study said. That could lead to safety, security and service being compromised, said Marion Blakey, president and CEO of Aerospace Industries Association.
Air travelers would feel the layoffs of the TSA screeners and custom agents in the forms of flight delays and longer lines, according to Stephen Miller, a principal of Econsult Corporation, which conducted the research on the economic impacts of FAA budget sequestration on the U.S. economy.
In addition to the impacts that the sequestration would have on the agency’s daily operations, it would also hamper funding for research and development and the completion of the NextGen project.
NextGen, which is a satellite-based air transportation control system, is expected to make the navigation of air traffic more efficient by shortening routes, reducing traffic delays and increasing safety margins.
The technology is considered by many experts to be the most significant improvement to the U.S. air transportation system replacing the current radar system, which was introduced in the late 1950s. When the project was initially proposed, its full implementation was expected by 2025, but the threat of sequestration may delay it by at least 10 years or even derail the effort completely, the study said.
Due to the array of benefits that the technology can provide, the delay in its implementation can cost various segments of the U.S. economy ranging from the hospitality industry to the aircraft manufacturing industry.
The annual direct costs associated with delayed benefits are estimated to be $15 billion, according to a study by Econsult. By 2035, the figure is estimated to double to $30 billion.
“There is a distinction between spending that is investment and just consumption,” said Mineta, noting that the spending on technology like NextGen will lead to efficiency and profitability in the industry as well as the whole economy. “They [Congress] are not making that distinction.”